We investigate the determinants of United States automobile registrations in states
in 1986, focusing on state and local taxes and fees, and on auto insurance premiums.
Using data on state tax and fee structures and the results of a phone survey of states
where automobiles are subject to property taxes, we calculate tax and fee costs for
a "new" and an "old" car. Regression results show that new car taxes have httle
effect on registrations, probably because owners respond to higher taxes by buying
older, cheaper cars. Higher old car taxes reduce registrations because low-income
owners cannot buy older or cheaper cars and thereby abandon ownership. Insurance premiums appear to have a negative effect on registrations.
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